Following Wednesday’s selloff, DXY appears to be regaining its smile.
The yield on the 10-year US Treasury note continues to fall, approaching 1.30 percent.
Powell’s testimony is next on the calendar, followed by weekly Claims.
On Thursday, the US Dollar Index (DXY), which measures the dollar against a basket of major currencies, struggled to find a clear direction around the 92.40 level.
Following Wednesday’s steep selloff from the 92.80/85 zone, the index is attempting to reclaim some purchasing interest.
The fresh selling pressure on the dollar occurred as a result of Chief Powell’s statements before testifying before Congress on Wednesday. Powell reaffirmed that current high inflation is only temporary, while also emphasizing that “significant further improvement” is still a long way off, putting any talk of an earlier-than-expected tapering of the bond-purchase program on hold.
Further dollar weakening currently mirrors the downward trend in key US 10-year note rates, which have been doggedly approaching the 1.30 percent mark so far on Thursday.
Later in the US data space, the Philly Fed Index, the NY Empire State Index, and Industrial/Manufacturing Production are all due, all ahead of Chief Powell’s second congressional hearing, this time before the Committee on Banking, Housing, and Urban Affairs.
On Wednesday, the recovery in DXY flirted with monthly highs around 92.80 on the basis of improving dollar sentiment, only to lose some of those gains later when investors analyzed Powell’s dovish stance during his maiden hearing. The index’s upbeat outlook is supported by the strong speed of the economy’s recovery, higher-than-anticipated inflation numbers, and mounting rumors of rate hikes sooner than predicted. The latter keeps the dispute between the Fed and the markets alive and flourishing.
This week’s major events in the United States include: Initial Claims, Powell’s second Semiannual testimony, the Philadelphia Fed Index, Industrial Production (Thursday) – Retail Sales, and July Consumer Sentiment are all on the docket (Friday).
On the back boiler, there are a number of important considerations to consider: Biden’s multibillion-dollar infrastructure and family-support proposal. Under Biden’s administration, there was a trade war between the United States and China. Speculation tapering vs. economic recovery Real interest rates in the United States vs. Europe. Is it possible that the US fiscal stimulus will cause the economy to overheat?
Now trading at 92.33, the index is down 0.03 percent and confronts support around 91.51 (weekly low June 23), 91.37 (200-day SMA), and eventually 89.53. (monthly low May 25). A breakout of 92.84 (monthly high July 7) would, on the other hand, open the way to 93.00 (round level) and finally 93.43. (2021 high Mar.21)./n
